Exhibit 10.8


                             THE COASTAL CORPORATION
                    DEFERRED COMPENSATION PLAN FOR DIRECTORS
                 Amended and Restated Effective October 9, 1997


      1. Participants. Any member of the Board of Directors ("Director") of The
Coastal Corporation ("Company") is eligible to participate under this plan
("Plan") and may elect to become a participant ("Participant") under the Plan by
filing a written notice ("Notice") with the Secretary of the Company.

      2. Deferred Compensation. Any Participant may elect to defer the receipt
of a portion of the Director's cash compensation otherwise payable to him by the
Company, which portion shall be designated by the Participant as a percentage of
the Director's cash compensation otherwise payable to such Participant. Such
election shall be made prior to the time any amount subject to the deferral
election is earned. The election is irrevocable for that period, but a different
election may be made with respect to different periods of deferred compensation,
provided such elections are made in advance of earning any portion of the cash
compensation subject to the election. A change of election shall be effective
only on the first day of January of a year and shall be made prior to the
effective date. An exception to the effective date for an election shall apply
when an individual first becomes a Director during the year or when the terms of
the Plan are substantially modified. Pursuant to these exceptions, a Director
may make an election within 30 days of becoming eligible to participate, or
within 30 days of substantial modification of the Plan, which election may be
effective prior to the end of that calendar year, but in no event shall the
election apply to any amounts which have previously been earned.

      Director's compensation deferred pursuant to this Section shall be
recorded by the Company in deferred compensation accounts ("Accounts")
maintained in the name of and selected by the Participant, which Accounts shall
be credited on each date of payment of Director's compensation, in accordance
with the Company's normal practices, with (a) a dollar amount equal to the
percentage of the amount otherwise payable as designated by the Participant or
(b) shares of Phantom Stock if designated by the Participant as provided herein.
The Company shall furnish each Participant with a quarterly statement of his
Accounts. The Company shall also credit interest to Account #1 from the date of
credit until final distribution of the Account. The percentage of director's
compensation that a Participant elects to defer under this Section will remain
constant until suspended or modified by the filing of another election with the
Company by a Participant as provided herein.

      3. (a) Account #1 -- Deferred Amount and Interest. The amounts credited by
the Company to Account #1 at the election of a Participant shall be credited
with interest at an annual rate to be determined by the Company each year. Such
interest rate shall be based on debt obligations issued by the U.S. Treasury
with a ten year maturity plus an upward adjustment to approximate the difference
between such rate and the average cost of borrowed capital of comparable
maturity for the Company, and shall be credited until Account #1 has been fully
distributed to the Participant or to the beneficiary or beneficiaries designated
by the Participant in a writing delivered to the Company.

           (b) Account #2 -- Phantom Stock. The amount credited by the Company
to Account #2 at the election of a Participant shall be converted each pay
period to that number of shares of Phantom Stock equal to the number of shares
(to the nearest hundredth of a share) of Stock which could have been purchased
with this amount at the Fair Market Value of the Stock on the date the cash
would have been paid to the Participant if not subject to deferral under this
Plan.

      During any period that the Company maintains Account #2 for a Participant,
on each date on which the Company pays dividends on shares of its Stock, Account
#2 of a Participant shall be credited with an additional number of shares of
Phantom Stock equal to the number of shares (to the nearest hundredth of a
share) of Stock which could have been purchased at the Fair Market Value for
shares of Stock on such dividend payment date, with the amount of dividends that
would have been received on the number of shares of Stock equal to the number of
shares of Phantom Stock in such Participant's Account #2, as of the end of the
month preceding the dividend record date. In the event of any stock dividend,
stock split, combination of shares, recapitalization or the like of the Stock of
the Company, appropriate adjustment shall be made in the number of shares of
Phantom Stock credited to the Participant's Account #2.


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      The Participant may not receive any amount from Account #2 any sooner than
the date which would be required to comply with the rules and regulations of the
Securities and Exchange Commission prohibiting short-swing transactions.

      Stock Options. As an incentive for a Participant to defer amounts into
Account #2, thereby further aligning his interests with those of the Company's
Shareholders, the Company shall grant to Participant an Option to purchase
shares of Stock of the Company equal in number (whole number of shares only,
with any fractional share carried over to the next pay period) to the number of
shares credited each pay period to the Participant's Account #2 pursuant to this
deferral. The Option exercise price shall be equal to the Fair Market Value
price used to convert the amount deferred by the Participant into shares of
Phantom Stock. Each Option shall be reflected in an Option Agreement, shall vest
on a cumulative basis as to one-third of such shares on each of the first three
anniversaries of the date of grant, and shall expire at the earliest of the end
of (i) the five-year period commencing with the date of grant, (ii) the
three-year period commencing with the Director's retirement from the Board or
termination of Board membership, or (iii) the one-year period commencing with
the date of death of the Director. The terms of the Option Agreement shall be
substantially in the form attached hereto as Exhibit A, and shall be subject to
such restrictions as required by law.

      4. Distribution. A Participant may elect a method of distribution in the
same manner as the Participant elects to participate in the Plan. Such election
shall be made prior to the time any amount subject to the distribution election
is earned. The election is irrevocable. A different election may be made with
respect to different periods of deferred compensation provided such elections
are made in advance of earning any portion of the compensation subject to the
election. Such distribution may not begin until the Participant terminates
service as a Director for any reason, including death.

      Interest on the deferred amounts shall be prorated by any method selected
by the Company to portions of Account #1 of the Participant which are subject to
different distribution directions of the Participant and/or the distribution
method selected by the Company, if applicable.

      With respect to all or any portion of the Accounts of a Participant with
respect to which the Participant has not submitted a valid distribution
election, the Company shall determine the method of distribution as described in
the following provisions.

      (b) Upon termination as a Director of the Company for any reason other
than death, the Participant will be entitled to receive all amounts credited to
the Participant's Accounts as of the date of termination of service. Subject to
the provisions of subsection (a), the Company shall determine whether the
Participant will receive distribution of all amounts payable to him under this
paragraph (b) in a lump sum or in installments over a designated period of
years, pursuant to the provisions of paragraph (e) of this Section.

      (c) Upon termination of a Participant's service as a Director of the
Company by reason of his death, the Participant's designated beneficiary or
beneficiaries will be entitled to receive all amounts credited to the Accounts
of the Participant as of the date of his death. Subject to the provisions of
subsection (a), such amounts shall be payable in a lump sum or in installments
over a designated period of years, pursuant to the provisions of paragraph (e)
of this Section.

      (d) Subject to the provisions of subsection (a), upon the death of the
Participant prior to complete distribution to him of the entire balance of his
Accounts (and after the date of termination of his service as a Director of the
Company), the balance of his Accounts on the date of his death shall be payable
to the Participant's designated beneficiary or beneficiaries pursuant to
paragraph (e) of this Section.

      (e) Subject to the provisions of subsection (a), the Company, in its
discretion, shall direct distribution of the amounts credited to a Participant's
Accounts, including interest credited thereon, to a Participant or his
beneficiary or beneficiaries pursuant to the preceding paragraphs of this
Section, in a lump sum, or in installments over such period of years as the
Company shall determine. Distribution shall be made or commence on the first day
of the month next following (i) the date upon which the Participant's service as
a Director of the Company terminates in the event of a distribution pursuant to
paragraphs (b) or (c) of this Section, or (ii) the date of the Participant's
death in the event of a distribution pursuant to paragraph (d) of this Section.
Subsequent installments, if any, shall be made on the annual,

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quarterly, or monthly anniversary dates of the date of the first installment as
determined by the Company. Each such installment, if any, shall include interest
credited to the balance of Account #1.

      5. Election to Defer. The Notice and Election by which a Participant
elects to defer Director's fees as provided in this Plan shall be in writing,
signed by the Participant, and delivered to the Company prior to the time any
cash compensation to be deferred is earned by the Director and prior to the time
any such cash compensation to be deferred is otherwise payable to the
Participant. Such election (and any subsequent election) will continue until
suspended or modified in a writing delivered by the Participant to the Company,
which new election shall only apply to Director's fees otherwise earned and
payable to the Participant after the end of the calendar year in which such
election is delivered to the Company (unless an exception provided in Section 2
is applicable). Any deferral election made by the Participant shall be
irrevocable with respect to any Director's compensation covered by such
election, including the Director's compensation payable in the calendar year in
which the election suspending or modifying the prior election is delivered to
the Company. The election to defer shall be made on a Notice and Election form
substantially in the form attached hereto as Exhibit B.

      6. Participant's Rights Unsecured. The right of the Participant or his
designated beneficiary to receive a distribution hereunder shall be an unsecured
claim against the general assets of the Company, and neither the Participant nor
his designated beneficiary shall have any rights in or against any amount
credited to his Accounts or any other specific assets of the Company. All
amounts credited to any Account shall constitute general assets of the Company
and may be disposed of by the Company at such time and for such purposes as it
may deem appropriate. Accounts may not be encumbered or assigned by a
Participant or any beneficiary. A Participant shall have no rights as a
stockholder with respect to shares of Phantom Stock credited to Account #2 nor
by virtue of any unexercised stock option granted pursuant to Section 3(b) of
the Plan.

      7. Amendments to the Plan. The Board may amend the Plan at any time,
without the consent of the Participants or their beneficiaries, provided,
however, that no amendment shall divest any Participant or beneficiary of the
credits to his Accounts, or of any rights to which he would have been entitled
if the Plan had been terminated immediately prior to the effective date of such
amendment.

      8. Termination of the Plan. The Board may terminate the Plan at any time.
Upon termination of the Plan, distribution of the credits to a Participant's
Accounts shall be made in the manner and at the time heretofore prescribed;
provided that no additional credits shall be made to the Accounts of a
Participant following termination of the Plan other than interest credited to
Account #1 pursuant to Plan provisions and adjustments to the number of shares
of Phantom Stock in Account #2 required by Section 3(b) of the Plan.

      9. Expenses. Costs of administration of the Plan will be paid by the
Company.

      10. Notices. Any notices or election required or permitted to be given
hereunder shall be in writing and shall be deemed to be filed (a) on the date it
is personally delivered to the Secretary of the Company or (b) three business
days after it is sent by registered or certified mail, addressed to such
Secretary at the principal office of the Company.

      11. Governing Law. This Plan shall be construed, administered, and
governed in all respect by the laws of the State of Texas.

      12. Definitions. The following terms used herein shall have the meaning
described below:

      "Fair Market Value" of the Stock as of any date means the average of the
high and low sales prices of the Stock on that date (or, if no Stock sale is
reported on that date, the next preceding Trading Day) on the New York Stock
Exchange, or if this definition is not applicable, the price as determined by
the Board of Directors of the Company in its discretion.

      "Phantom Stock" means the equivalent of a share of stock of the Company
which entitles the Participant to receive in exchange, at the time and under the
terms provided for distribution herein, an amount in cash equal to a share of
Stock.


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      "Stock" means the common stock of the Company $.33 1/3 par value, or in
the event that the outstanding shares of common stock are later changed into or
exchanged for a different class of stock or securities of the Company (or any
other compensation) that other stock or security.

      "Trading Day" means a day on which trading of securities takes place on
the New York Stock Exchange and the NASDAQ National Market and on which shares
of Stock are traded.

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                                                                     Exhibit A


                             THE COASTAL CORPORATION
                             STOCK OPTION AGREEMENT


      Pursuant to the terms and conditions of The Coastal Corporation Deferred
Compensation Plan for Directors (the "Plan"), a copy of which is attached hereto
and incorporated in this Agreement by reference, The Coastal Corporation (the
"Company") grants to (the "Optionee") the option to purchase shares of the
Company's Common Stock, $.33 1/3 par value, at the price of $ per share (the
"Option"), subject to adjustment for changes in capitalization of the Company.

      This Option shall be for a term commencing on this date and shall expire
at the earliest of the end of (i) the five-year period commencing with the date
of grant, (ii) the three-year period commencing with the Director's retirement
from the Board or termination of Board membership, or (iii) the one-year period
commencing with the date of death of the Director. At the time of termination of
service as a Director, unvested Options shall be forfeited.

      This Option shall become exercisable (in whole shares) in the following
manner:

                                                 Cumulative Shares Exercisable
                                                 -----------------------------
      First Anniversary of Date of Grant                        1/3
      Second Anniversary of Date of Grant                       2/3
      Third Anniversary of Date of Grant                        100%

      This Option is a nonqualified stock option which is not governed by
Section 422 of the Internal Revenue Code of 1986, as amended.

      The terms and conditions of the 1997 Director Stock Plan shall govern this
Option to the extent not inconsistent with this Option or the Plan.

      The Optionee in accepting this Stock Option Agreement accepts and agrees
to be bound by all the terms and conditions of this Agreement and of the Plan.

      Granted the         day of                       , 199     .
                  -------        ----------------------     -----

                                       THE COASTAL CORPORATION

                                       By
                                         ---------------------------------


ACCEPTED this         day of                   , 199     .
              -------        ------------------     -----


--------------------------------------------------
                       Optionee


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                                                                    Exhibit B


                             THE COASTAL CORPORATION
                      Notice and Election to Participate in
                    Deferred Compensation Plan for Directors
                         and Designation of Beneficiary


      1. Percentage Deferred. Pursuant to The Coastal Corporation Deferred
Compensation Plan for Directors (the "Plan"), I hereby elect to defer, as
provided in the Plan, the receipt of _____% of the Director's fees payable in
cash and earned by me in connection with the performance of my services as a
member of the Board of Directors of The Coastal Corporation beginning
________________, 199_. (Note: Changes may be made effective only as of January
1 of a subsequent year, unless an exception described in Section 2 of the Plan
applies.)

      2. Deferral Account. Of the amounts I have elected to defer in Section 1
above, I elect to have such amounts credited to my Account(s) as follows:

           (a) _________%   Account #1 (Interest Fixed Account) to
                            be credited with interest as provided in
                            Section 3(a) of the Plan.

           (b) _________%   Account #2 (Phantom Stock Account) to be
                            credited in the form of shares of Phantom
                            Stock, and for each share of Phantom Stock
                            credited to my account at the time of this
                            deferral, I shall be granted an option to
                            purchase a share of Stock, as provided in
                            Section 3(b) of the Plan.

      3. Distribution Election. The proceeds of my Accounts under the Plan are
to be distributed following my termination of service as a member of the Board
of Directors of the Company as follows:

     _______        As a single sum upon my termination of service;

     _______        In two payments: 50% upon my termination of service, and the
                    balance on the ____ day of __________________ in the
                    calendar year following the calendar year of my termination
                    of service;

      4.   Beneficiary.  I hereby designate _________________________ as my
beneficiary to receive all amounts held for me under the Plan which have not
been paid to me in the event of my death. My Beneficiary's social security
number and address are as follows:

Beneficiary's Social Security Number _______________________

Beneficiary's Address    ___________________________________
                         ___________________________________

__________________________________                     _________________
Participant                                                   Date


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